Free Site Registration

Solving the Last Mile Problem in Investment Research

Traders Magazine Online News, July 13, 2017

Brijesh Malkan

Much of the news around the impact of MiFID II on research has focused contextualising the challenges of unbundling through the lens of the industry’s idiosyncratic evolution and how market participants attempt to value services and implement market structures. But looking ahead, how will the research value proposition change over the short to medium term, and what are the products and strategies managers will turn to?

At its core, the raison d'etre of research is to support better investment decisions and improve outcomes. However, many research firms take an economistic or journalistic view when defining value, assuming that if they produce the best content, rational consumers will beat a path to their door.

However, building a better mousetrap is no longer enough (if it ever really was). And innovative providers and ecosystem players now recognise that while content may be king, it has to be accessible, actionable and integrated, to be of superior value. If you do not understand why – take a stroll in the park on a hot summer’s day and observe the queue of people paying three times the supermarket price for a can of cola from a strategically placed stall.

Driven by the valuation process, the research industry is undergoing a metamorphosis from content-based products, to information/analytics, workflow tools and ultimately a set of tailored solutions.

Research, research everywhere

“Do you know how many research emails I receive on a daily basis?” Asked the hedge fund manager as he leant back in his chair. “Over 500!” he responded to his own question.

“How do you get through them all and identify the most valuable insights?” I queried. “I don’t.” he responded, disappointed I had somehow missed his point.

The fact is, investment professionals do receive a lot of research, but rather than volume being a metric to demonstrate status within some perverse pecking order, it simply compounds a problem that should determine rank – better investment decisions.

How do professionals discover high quality research that is relevant to their investment process? In the past, they have applied heuristics such as following specific authors, scanning subject headers or relying on curation by a salesperson/account manager. But this has always been a flawed process exposed by increasing volumes of content. Now, innovative firms are leveraging behavioural insights and new technology to tackle the issue head on.

Firstly, the research report is changing. Editors, for many reasons – some legitimate and some subversive, have often made reports more difficult to derive insight from, than is necessary. This is changing – for example, with the help of a team of psychologists, UBS has updated the structure of their reports, to improve clarity and accessibility.

Secondly, more research is being delivered in rich multimedia formats. Podcasts, webinars, videos and dedicated mobile content are all on the rise. This supports deeper insights and more efficient multi-tasking.

For more information on related topics, visit the following channels:

Comments (0)

Add Your Comments:

You must be registered to post a comment.

Not Registered? Click here to register.

Already registered? Log in here.

Please note you must now log in with your email address and password.